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How hard can it be? - A Q&A with's Christopher Brown

Christopher Brown, - 27/05/2015

We've heard it a many times from some of our contemporaries, "Structured products are complex/convoluted/confusing." We completely accept and always have, that there are many good structured products out there and there are a number that we feel are not suitable for the investor for a number of reasons. Christopher Brown, one of the newest members of the Structured Products Team at Lowes, joined us in 2014 with little or no experience in the financial services sector. We thought you might be interested to hear how he developed his understanding of structured products and also what he thinks of the complexity argument.

Before you worked at Lowes what was your experience in Financial Services?

Chris: Non- existent. I joined Lowes straight out of university looking to get my foot in the door and hoping to develop a career in Financial Services. I studied History at Newcastle University and I basically knew nothing other than I wanted to do something completely different to what I’d studied and finance had always intrigued me. So my introduction to structured products was my introduction to the Financial Services industry.

How difficult was it to get your head around structured products and how they work?

Chris: Truthfully I did find them a little confusing initially. This is coming from someone, however, who had absolutely no experience or knowledge of financial services or investment products. I had nothing to compare them with, so to me, any financial product appeared complex. When I broke them down though and got to know a little more about investments and markets in general, the complexity seemed to disappear. Basically structured products are just like any other investment product in that you need to be aware of the risks in relation to the potential returns. If the risks and potential rewards of investing in a fund such as a unit trust or investment trust can be adequately explained to an investor then I can see no reason why the same can't be said of structured products. Singling out structured products and saying investors aren't capable of understanding what they're entering into, but that they would perfectly understand the risks attached to investing in a fund doesn't seem to make much sense to me.

In your opinion, are structured products complex instruments to understand?

Chris: No. As I have stated above I am someone who has recently started in the industry and is still learning not just about structured products but about all investment products in general. I have found the argument that structured products are too complex a little puzzling. I am very much of the opinion that learning about finance and investments is like learning a new language and so I wouldn't blame someone for saying any investment is complex. The issue isn't really whether structured products are too complex to understand. The real problem is that the terminology used to describe the features of a structured product could be made simpler to understand by investors.

It is my belief that the industry needs to work much harder to make products more accessible to the layman. Some of the terms associated with structured products can appear confusing at first, even though what they refer to is very simple. A more unified, less jargonistic approach to creating literature from providers would be a great start.

At we strive to break down the jargon to inform investors of every aspect of the structured products that we feature on the site in order that they might be better equipped to make their investment decisions.

In my view every potential investor in structured products needs to be made aware of the product's terms, the conditions that need to be met in order to generate a return and what the risks to their capital are, rather than how a derivative works or what a zero coupon bond is.

The recent FCA research into structured deposits has cast a shadow over the sector yet it reflects an investigation into products sold exclusively by banks in the past. In that very same review, the FCA acknowledged that structured products have a place in an investors' portfolio. A look at what the best the IFA sector currently has to offer is to look at a plethora of what we believe to be value-for money-products and they should be considered and advised upon if they are suitable for the investor. That isn't to say that the FCA review wasn't valid in its concerns or that the sector should not listen. The onus is on the profession to think more about how they can make the marketplace easier to understand and to present products in a way that is more comprehensible to the investor.

If there was greater awareness of the potential benefits to certain investors of a structured product and more advisers were using them where appropriate in their client's portfolios, then perhaps the idea that they are overly complex would eventually just fade away.

Many people are unaware of how even a bank account really works, yet they are happy to put their money in a fixed term deposit because of the familiarity of a bank's brand or some vague idea of their money just sitting in a safe. Many people would indeed not understand the inner workings of a structured product, but they are not asked to understand the complexities of other investments such as a unit trust so is it right to constantly criticise structured products for being seemingly too complex for investors to understand?

In the context of other investments I certainly believe that if the potential outcomes were the measure of how complex an investment is, rather than how it achieves those outcomes, then many structured products would be regarded as being amongst the simplest of investments.

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